Deal Radar 2008: eHarmony Replacing Yenta
Check other articles in the series...eHarmony is a highly effective online dating / matchmaking site. The site uses its patented Compatibility Matching System™ to match singles.
In November 2004, eHarmony raised $110 million in a Series B round of financing from Sequoia Capital, Technology Crossover Ventures and Tuputele Ventures. It had earlier raised $3 million in Series A from Sarofim Fayez and Co.
eHarmony has over 17 million registered members and around 10,000 - 15,000 new member sign up every day. On average 90 people who met via eHarmony get married every day. So if you are single and thinking about finding someone, eHarmony sounds like a place you ought to visit.
The site is expected to earn $200 million in revenues in 2007 and is a profitable business. The site earns revenues from subscription, which starts at $59.95 per month or $251 for a year. It also offers gift subscriptions for sale. Paid subscriptions at eHarmony has been growing 30% Y-O-Y. It is expected to have $100 million in cash by the end of 2007.
eHarmony spends heavily on advertising and spent over $110 million in 2006.
eHarmony was valued at $350 million pre-money valuation when it raised $110 million in 2004. The site is expected to hit the market with an IPO with a very high valuation soon, except the impending slowdown in the US economy and a bleak outlook is a slight damper in its plans. It could still do an IPO at 6 times its revenues of $200 million at $1.2 billion this year.
The Company is a good acquisition target for Gannet and McClatchy who have been losing out on the personal / matchmaking advertisement revenues due to their shift online. eHarmony can single-handedly turn around either company, although eHarmony’s investors may have their eyes set on a different type of acquirer, if acquisition is the route they want to pursue.
New media companies like Yahoo and News Corp could also look at acquiring eHarmony.
This segment is part 16 in a running series Zappos Wants to be Amazon When it Grows Up →
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